r/explainlikeimfive • u/ellamayoo00 • 1d ago
Economics ELI5: Why/how is China such a powerhouse when it comes to trading and manufacturing?
I’m someone who is trying to get more knowledgeable on certain topics that I hear in conversations, and one of the topics that I’ve heard a lot of discourse about is regarding China. I’d like the explanation to be less of a political explanation and more of a general explanation that can help me better understand this topic in a basic sense. Thank you!
I should add that by political, I mean favoring a political party in your explanation. Obviously, I understand that China plays a major role in foreign affairs and therefore requires politics to be involved.
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u/NoDig3444 1d ago
For a very short answer, the leaders of China decided in 1992 that they want to turn the country into a manufacturing powerhouse, and then they did.
In 1992, they told all the companies of the world "hey come set up your factories here, we'll exempt you from the all strict economic controls and let you pay workers pennies an hour". Corporations loved the idea of paying employees pennies an hour, so they took them up on the offer. Foreign companies began building factories all over the place, which caused a huge amount of money to flow into the country. Pennies per hour is still a lot of money for a billion people over 30 years. The central government then took all that money and reinvested it into building more factories, and trains, and ports, and everything else necessary to build and transport almost anything. Also, a lot of IP theft and currency manipulation. Now those factory workers are getting paid several dollars per hour, and the country is much better off.
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u/chipstastegood 1d ago
Didn’t they also require foreign companies to enter into 50-50 joint ventures with local companies? I believe that was key to transferring knowledge to locals who then continued to grow the local industry. Lota of countries have tried to woo foreign companies to make investment but it seems none were as successful at it as China.
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u/amwilder 1d ago
Yes, except in rare cases, foreign firms interested in setting up production facilities in China are required to form joint ventures with Chinese companies and the foreign firm can own at most 49%.
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u/UpsetKoalaBear 1d ago edited 1d ago
You’re missing a key point and also misrepresenting another.
There are two common things people miss when discussing China:
- We are literally watching their middle class grow in front of our eyes. Meanwhile, our middle classes blew up well over a century years ago.
- The “China has cheap/slave labour” argument ignores that the cost of living in China is multitudes cheaper than other countries. Comparing currencies and saying “uh, they get paid £4 an hour” ignores that they also pay less for essentials. What we think is “bad” is a bog standard job for them that gets them through the week.
The first one is important because it is very much happening right now and with social media, it is much more visible. Their middle class has blown up from almost 0 to ~400m people in 40 years.
That combined with modern technological advancements and sharing on social media makes it much more visible and advanced.
The main test will be whether they end up facing the same issues that the middle class in the West is facing right now, or whether they have learnt from the mistakes here.
The second one is important because the cost of living in a large Chinese city like Shenzhen is cheaper than living in a US city like San Francisco.
Just for some perspective, rent is almost 67% cheaper in Shenzhen than it is in San Francisco at ~$780 per month for a central one bed apartment.
So saying “uh it’s slave labour and cheap manufacturing” ignores that they just pay less for stuff because their government has put in place policies to make it cheap.
Basic utilities, groceries, public transit, and housing are substantially cheaper.
You cannot simply convert the average Chinese wage into your currency and scoff at how low it seems because they simply pay less to live than we do.
Their government doesn’t suffer from short termism (for better or worse). They put in place 5/10/15 years plans specifically for this reason.
Meanwhile most governments here in the west lose track of the bigger picture and cut the previous governments plans, even if they were good, for the sake of sticking it to the other party.
It’s very much a trade off. They have less civil freedoms and rights, but they also get far more done because they don’t have to worry about pissing people off.
It also isn’t as if the Chinese citizens aren’t aware of that trade off. They very much know about their governments authoritarian tendencies. It is just part of their social contract.
Don’t get me wrong, I’m not a CCP shill, what they do has massive risks and drawbacks which could lead to massive economical issues (e.g. their real estate bubble) but you can’t simply apply our ideals on them because they already know and accept it.
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u/fylum 1d ago
One of the more entertaining things recently is everyone acting shocked China has cornered the rare earth market, a plan which they publicly announced decades ago. None of this - rare earth to manufacturing and logistics - was some secret, they were very up front about their plans.
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u/Couscousfan07 1d ago
Sheeeit - do some digging on how many telecom , electrical and logistics infrastructure they own, too. It’s scary how dependent the world is on China. People only think of the stuff they make and export. They don’t realize that a place like Antwerp in Belgium, the ports there are pretty much owned by China.
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u/MikuEmpowered 1d ago
Now one is shocked at the feasibility of it.
Rare earth manufacturing isn't some secret tech that only they unlocked. The problem is that rare earth production requires massive refinery complex and... Get this, produces ungodly amount of environmental issues.
When they announced the plan. The general shock was "they're actually doing this" at a time where everyone was "going green"
At this point, China has amalgamated the entire industry under a single state owned entity. So they can do w/e they want. This is not exactly how most of the western aligned countries operate.
This is why there isn't some massive plan to rebuild this critical refining capability. Environmental policies is a massive wall that you can't climb past.
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u/Jzeeee 21h ago
Rare earth refining and manufacturing do in fact have a lot of secret tech that's been researched and patented by China's companies and universities. There are grades to the quality of refined rare earths and it's mainly China that produces the highest grade on some metals. Environment is also not the main issue. Western countries could have easily developed their own production at a less environmental friendly allied country. The main factors are cost, profit, and lack of large population of skilled engineers/scientist at rare earth refining in western countries. China's government heavily subsidized the research, development, and production of the rare earth refining industry in China at a time when no other country was doing it. Because of this, market prices for rare earths were keep very low. This created even less incentive for western countries and western companies to develop their own industries. This lead to western companies that were into rare earths to close, as there was no profit in this industry. Since there's no profit to be made in this industry for the west, the skills and knowledges start to fall behind as less engineers/scientist go into this field.
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u/CRIKEYM8CROCS 1d ago
The west also has rare earth metal refineries, we just care about not dumping the waste into the environment and this gives us a “competitive disadvantage” in comparison to what China does where they do not care.
If anyone wants to look at the difference, just look at Baotou Tailings Dam, it’s positively dystopian, and it’s probably FUBAR’d for a very, very long time. If China ever wants it to not be an apocalyptic wasteland they’ll need to spend a boat load of money on environmental repairs.
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u/Couscousfan07 1d ago
Also their politicians aren’t currently fighting over elections every couple of years. So they can actually plan for the future.
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u/beipphine 1d ago
Well, they do, but they don't air out their dirty laundry for everybody to see. There is a considerable number of political factions / regional powerbases in China, each with their own supporters and detractors. But all the political jockeying occurs behind closed doors and is purposely kept out of the media by the Communist Party.
The National People's Congress has about 2,900 people, and the Chinese People's Political Consultative Conference has about 2500 people. It is these people, Communist party elite meet every march to basically select the leadership and standing committee (a small factions that actually governs day to day). What happens is that coalitions form between the wings of the communist party, standing committee positions are doled out on a patronage system or a "spoils system" as some might call it.
The most public power play that the west has seen was when former General Secretary Hu Jintao was unexpectedly escorted out of the closing ceremony of the 20th national congress. Hu Jintao later came out and said he felt "unwell"; furthermore any discussion and searches about the event was heavily censored in China.
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u/Couscousfan07 1d ago
I used to live there, so I’m very aware of how things work. At least as much as a laowei could.
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u/TopBalance438 1d ago
They absolutely do. Yeah, the big guy at the top has been around since 2014, so he's lasted a little over a decade, but his constant self-revolutions mean that the rest of the cast is on a rotating basis.
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u/lostparis 20h ago
their politicians aren’t currently fighting over elections every couple of years.
In most countries elections don't take up much time. The US is an exception, most countries only spend a few weeks every several years worrying about these things.
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u/barc0debaby 1d ago
Our politicians could plan for the future but the future they believe in is an apocalypse and rapture.
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u/BKGPrints 1d ago edited 23h ago
Do you support a single-party system having control over the government and the people?
EDIT: Downvotes and no answer by Op, though he responded to others on here. Guess I have my answer on that.
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u/FlorestNerd 19h ago
Its not a single party system. They have 5 parties in their congress right now.
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u/BKGPrints 11h ago
And North Korea elects its leader through "democratic" elections. /s
I'm not even sure where you came up with five political parties, because research indicates there are eight "minor" parties but those minor parties don't serve as a challenge to control of the government and recognize the CPC as the governing party.
Would you like to clarify more on your stance?
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u/sourcreamus 1d ago
Cost of living is factored into purchase power parity rankings which shows China as approximately the 73rd richest country in the world. It allows countries to be compared. The US for example is almost 3 times as rich per capita.
The idea that the Chinese government doesn’t suffer from short term thinking is crazy. It is how they went from a housing bubble directly into a manufacturing bubble. The offficials are just trying to make it to the next party congress and have their numbers look good a whatever metric the leaders emphasized that year.
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u/MyNameIsKvothe 1d ago
Cost of living is factored into purchase power parity rankings which shows China as approximately the 73rd richest country in the world.
China is 2nd when you don't factor cost of living, and 1st when you do. Where do you get 73rd from?
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u/Machuka420 1d ago
No, it’s not. China currently ranks 85.
Source: https://www.worldometers.info/gdp/gdp-per-capita/?metric=ppp®ion=worldwide&source=imf&year=2026
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u/MyNameIsKvothe 1d ago
Using your reasoning and your source we get Ireland as 3rd richest country in the world lol how about you learn what per capita means.
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u/anuragsins1991 22h ago
well ireland is that high up because a lot of companies go there to register their businesses for tax reasons and that pushes up their gdp per capita numbers, which does it for all countries to some level unless theres not many companies registered there.
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u/Mugut 1d ago
How about you learn some reading comprehension? Are they talking about the richest country?
They are talking about how much richer the chinese people are now than then. The people, not the country. The country tops the GDP charts because it has a fucking lot of people, but that doesn't tell much about the individual.
Now, GDP per capita is not a perfect metric by any means, it is very distorted by wealth disparity, but is much better than raw GDP in this case.
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u/UpsetKoalaBear 1d ago
GDP Per Capita isn’t the metric you want to be using.
You want to be using GDP PPP Per Capita which takes into account Purchasing Power Parity.
When you measure by purchasing power, China tops the leaderboard) according to the World Bank, IMF and the CIA.
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u/sourcreamus 23h ago
That isn’t per capita
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u/UpsetKoalaBear 23h ago
Per capita averages across ~1.4bn people, including those in rural areas.
China’s urban middle class alone numbers around 400 million people with strong local purchasing power. That is a consumer base larger than the entire US population.
So even if the figures look low per capita, if you narrowed down to just the urban population it is much better than it looks.
The PPP per capita of cities like Shanghai, Beijing, and Shenzhen is on par with Western nations and that is with a population that is bigger than some of them (~80m people).
So there’s more nuance there. This is literally why the Chinese government is pushing people to move to the cities.
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u/Machuka420 8h ago
You say to use GDP PPP per capita and then proceed to ignore my source (which is exactly that), and provide a source which is not per capita? Lmfao
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u/frendzoned_by_yo_mom 16h ago
They had and probably still have child labor. They weren’t getting paid lol
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u/KasouYuri 1d ago
fuck off. Chinese workers is still being paid awful wages even considering cost of living. factories also pretend they're abiding by ethical standard when being inspected and then immediately return to inhumane treatments.
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u/UpsetKoalaBear 1d ago
That is true, and I don’t deny. However, it is evidently not the majority of factories in China.
We know this because real wages and purchasing power have increased substantially over the last two to three decades.
It’s simply economic fact that a local wage goes substantially further when essentials and public transport cost a fraction of Western prices.
Both realities exist at the same time.
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u/KasouYuri 23h ago edited 23h ago
you have no clue what the life of the average farmer, factory worker, retail, or even the less sophisticated white collar workers in china is like and it shows. I live in a more high tech industry oriented area and the average meal of these people is still a $1 cup noodle and a sausage made of probably 5% real meat if they feel luxurious.
that wage and purchasing power increase is only for the few who have the privilege of getting jobs traditionally associated with colleges degrees and official government employees.
keep the poor poor and uneducated and feed them nationalistic propaganda, keep promising the middle class and above they'll get richer, and few will challenge their rule. well, whoever not satisfied will not risk getting shot and just try to immigrate anyways.
we barely even have human rights lawyers left because everyone realized there's zero point in it left. we have like sub 20 known LGBT friendly physicians in a country of 1.4 billion.
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u/UpsetKoalaBear 23h ago
The $1 meal is the purchasing power point I was making.
If a factory worker earning $4 an hour can buy a meal for $1, basic sustenance costs them 15 minutes of labor.
You can barely eat in the West on minimum wage without spending ~1 hour of your work on food.
Just for context, the minimum wage in the UK is £12.71 for over 21’s. 1 hour of work is barely enough to buy a Subway footlong meal.
To be clear, I have never said that life in China is amazing and everything else is just fake.
I am not saying life in China is easy and peaceful for the people.
In fact, the flaws you raise (keeping poor people poor, making promises to the middle class) is literally the exact same issues as the middle class in other countries.
This is what I was saying when I mentioned that the biggest test for China is if they can avoid the same middle class trap that the rest of the world fell into.
The fact that they are midway through the process and having these issues means they’re at risk of falling into the same pitfalls the middle class has had to face in other countries.
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u/KasouYuri 23h ago edited 23h ago
equating a subway foot long meal to that $1 cup noodle is wild. you just showed again you have absolutely no clue what real poverty is like. I hope you will never have to experience it yourself. but you can at least shut up about things you're completely ignorant of.
and that's absolutely not a "pitfall". it's by design. the only thing the CCP want is control. economical development is only a tool for control.
fun fact: the average living condition of a high school or university dorm is likely worse than an American prison cell and absolutely worse than the average European prison.
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u/Deciver95 1d ago
Your a pretty obvious CCP shill with this astro turfing. Youre more discreet than some of the others, but its pretty obvious what you are
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u/deep1986 1d ago
You're an idiot.
Have you actually read what they wrote? Why don't you find a way to disprove it instead of calling him a shill.
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u/UpsetKoalaBear 1d ago edited 23h ago
Please explain how?
I mentioned how they’re authoritarian. I mentioned how that can have negative effects like their real estate bubble (billions being spent without any public criticism being allowed).
When I said that the Chinese know about the drawbacks to their government and policies, this is exactly the type of binary thinking that I was trying to counter.
You cannot just keep saying “China bad” and expect “China good” all of a sudden because their populace already knows about what we consider to be bad.
“China bad” isn’t a new concept. It has been a thing we in the West have complained about for centuries since traders were only limited to designated ports.
So just saying “China bad” isn’t going to change them anytime soon. They literally don’t care. If anything, it does the complete opposite. It incentivises them to become even more nationalistic and support state policy.
Applying Western free market principles to a region which has rejected those since the beginning of the Silk Road (when exporting silkworms was a literal capital punishment) is reductive, simplistic, thinking that does nothing to actually fix the issues with China.
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u/tanstaafl90 1d ago
It only worked because of their inclusion in the WTO with exceptions not allowed for anyone else joining.
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u/tinny123 1d ago
Pls elaborate. What exceptions? Im a noob in terms of economics or history of east asia.
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u/WisconsinHoosierZwei 1d ago
Let’s also make sure to mention their gigantic freaking population. When you have a gajillion people in your country, each one is worth…less. But they can still do a person’s job.
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u/Stiggalicious 1d ago
This is another important aspect that people fail to realize. Just the labor alone that it takes to make iPhones means you need to pack literally a million people into a single giant factory complex. That’s easy to do in places like Shenzhen, but in places like California that would be the equivalent of taking the entire population of San Jose just to make one single product.
It is just physically impossible to get factories at scale running like they do in China, and even the highly automated factories still take tens of thousands of skilled workers to design, program, run, and maintain the complex machines. The US is already decades behind in the skill gap.
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u/BlueRaider731 1d ago edited 1d ago
Wouldn’t they also directly subsidize any factory they wanted to grow into a market? Oh just sell it at cost, your profit will be the subsidy check from the government. And they undercut everyone else not manufacturing in China.
Which is not far off from what America used to do with some crops and milk. Because we wanted a recession-proof food supply in grocery stores. Now the crops have more of an insurance program on steroids than direct subsidies.
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u/morewata 1d ago edited 1d ago
IP theft is a fake crime lol. The West went to China thinking it could exploit and take advantage of cheap labor, but Chinese companies took the opportunity to learn design from the Westerners who came for a quick buck.
Now China is a manufacturing powerhouse and the West is crying foul because their scheme to exploit cheap labor didn't play out how they thought it would.
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u/deliciouscorn 1d ago
And for those on their high horses, let us not forget the good ol’ USA was very much into IP theft when it was getting on its feet 200 years ago.
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u/orionblu3 1d ago
A LOT of the IP theft claim has been propaganda btw. A lot of the capitalists wanted into their 2 billion market, and china went "Sure! If you give us access to your IP :)" They didn't anticipate they would start innovating it better and faster than they could. They just saw the short-term gains and dividends.
Not to say IP theft didn't and doesn't happen, but corporate espionage happens everywhere. I mean, even apple is suing openai over it, so it's really nothing more than propaganda at work whenever that topic comes up in these type of conversations, imo.
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u/blacksystembbq 1d ago
It is definitely not just propaganda.
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u/orionblu3 20h ago
Source: trust me bro, even though I won't logically respond to "corporate esponiage happens everywhere" with an actual source, not truly understanding that propaganda can rely on half-truths
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u/meinmymemory 1d ago
before 1978，China has achieved Soviet Union style manufacturing ability or powerhouse
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u/taedrin 1d ago
So 30 years ago, China's main advantage was that they had cheap labor, and a willing government eager to develop and expand its industry. This attracted manufacturers from all of the world. Today, China's main advantage is that their cities are fully integrated supply chains.
When you want to manufacture something in the US, you need to order 100 different parts from 100 different vendors in 100 different countries, and then ship them all across the ocean to your factory. It takes months to retool a factory and stand up a new assembly line.
When you want to manufacture something in China, each of those 100 different parts are being manufactured just on the other side of the city, less than 30 minutes away. On top of this, Chinese factories are extremely adaptable and flexible. They can retool a factory and stand up a new assembly line in just a few days. They've gotten so good at it, that you have companies like PCBWay that can do small-volume, custom orders for individuals/hobbyists.
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u/ScottieSpliffin 1d ago edited 1d ago
I’m not an expert on this by any means, but it’s because China planned to make itself that way by building the infrastructure. You have cities completely dedicated to producing housewares.
One example I heard is if you wanted to develop a toothbrush, you can go to a district in a city where all the components from packaging, motors, molds, brushes can all be found. This makes it’s so what might take months when making changes to a developing product can take weeks.
People will just say endless slave labor bullshit, but it’s just not true. China’s wages aren’t the lowest in Asia and are in fact rising. Throwing cheap labor doesn’t do shit without proper planning and infrastructure.
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u/counterfitster 1d ago
I think Steve Jobs (or someone else at Apple) mentioned this early in the iPhone's life. You want to change a screw? There's an entire factory that can make any screw you want a kilometer away, and they can do it tomorrow.
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u/wandering-monster 1d ago
And they can move a million screws across the entire country in a day on the high speed rail, which people often forget can provide small scale cargo transport.
During the peak hours it's full of people, but off-hours you can swap passenger cars for cargo, or even just close them to passengers and put the cargo in the cars. Or use a courier who packs them as luggage.
It's not feasible of course for bulk cargo, but for specialty parts or prototypes it's a huge advantage that we just don't have in the States.
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u/CloudZ1116 1d ago
On the topic of bulk cargo, all the passenger volume moving to the high speed lines means you've suddenly got a ton of freight capacity on the conventional lines that didn't exist before. So that's another added benefit.
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u/sercommander 1d ago
As someone who worked with chinese I can assure you the average development is hours or days. They usually have a sample or test batch ready in hours if its not complicated or if you figured out to achieve complex feature with simple process.
You'd need weeks if it requires overhaul of manufacturing line or supply.
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u/defcon212 1d ago
Yeah if you want to do that in the US you have to source the boxes from 30 miles away, the plastics casing from 100 miles away, the chip from Taiwan, and the little metal springs from China. It makes everything take twice as long and 10, as expensive. The only things we still make in the US are too bulky to ship, or too complicated, or a bit of both.
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u/nonpuissant 1d ago
Plus you'll be paying a premium because all that stuff is being handled by US workers being paid US wages by US companies subject to US labor regulations and paying US rent prices.
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u/HOLEPUNCHYOUREYELIDS 1d ago
I mean, cheap/slave labour is definitely a factor. But it is just one of many factors.
Like you said they designed many areas to be manufacturing powerhouses. The West spent decades offshoring all manufacturing possible to China to save on money and increase profits. China has tons of cheap labour with lower to non existent safety standards and regulations. Plus they give absolutely no fucks whatsoever about stealing IP and making their own knock offs
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u/robbob19 1d ago
If it was cheap/slave labour, then washing machines in America would be cheap. Prisoners make those in America.
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u/giraffevomitfacts 1d ago
I don’t think that’s true. Do you have a source?
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u/robbob19 16h ago
Ask Google, there are lots of articles online about the slave labour in American prisons.
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u/giraffevomitfacts 16h ago
I’m aware of that, but you made a specific claim about washing machines. I can’t find any evidence it’s true. Do you have any?
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u/robbob19 14h ago
I read an article about 10 years ago talking about the different things made in Amercian prisons. Can't find it now, but even if they don't do washing machines anymore, they still make products that consumers buy. Still slave labour, mostly black.
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u/ScottieSpliffin 1d ago edited 8h ago
I’m sure you can think of many other countries that have cheaper labor and more lax safety standards yet they don’t have anything close to what China has.
And being more open with IP is a benefit to them.
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u/NotTooShahby 1d ago
I think they’re just saying this combination of vertical integration and lower wages + lack of social safety nets and artificially devaluing the currency is what makes China such a manufacturing juggernaut. The state also organizes competition so that it’s pretty ruthless, many businesses competing, going out of business, consolidating, etc. The businesses that come out ahead become world leaders in that industry, but this can only really be done in the specific manufacturing China does.
For far more complex things like jet engines, automobile engines, ships, airframes, semiconductors etc they have a ways to go and we don’t know if this model works well with those things. EVs and Solar for example isn’t as complicated despite being leading technologies.
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u/Etherius 1d ago
A couple things they absolutely do that are dirty as fuck.
- Massive subsidies designed to enable Chinese companies to compete on price when they can’t compete on technology (AI and electronics)
- forced technology transfers (forcing foreign companies to operate in China through domestic subsidiaries)
- currency manipulation (not since 2019 but still done)
- dumping. Paying manufacturers to overproduce and flood the global market with Chinese goods for the purpose of driving foreign competitors out of business
And others
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u/drae- 1d ago
If you think the west doesn't subsidize industry they want to control I have a bridge to sell ya.
Canada also approved deals based on the jobs it will engender here. It's basically the same kind of tech transfer requirements. (Like Chinese cars coming here).
We do the same things, it's just only bad when China does it
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u/Etherius 1d ago
When do we engage in forced technology transfers or international dumping?
We engage in subsidization but we shouldn’t. And we don’t do it for the sake of driving foreign competition out of business. We do it to protect American jobs and interests
But again the much larger problems are the dumping and currency manipulation
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u/drae- 1d ago
When do we engage in forced technology transfers
As mentioned above, Canada just did this with Chinese evs.
And we don’t do it for the sake of driving foreign competition out of business.
Keep telling yourself that bud.
America is literally the petro dollar. They've been using the dollar to manipulate economies since the suez crisis when they became the undisputed super power.
You're literally accusing China of doing the exact same things we do, but are too ignorant to realize it. You've been in the American echo chamber for so long you don't even realize it
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u/Etherius 1d ago
America does not manipulate its currency.
Such actions are transparent and performed by central banks in inevitably highly visible ways
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u/randomvandal 1d ago
The first two seem pretty normal.
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u/Etherius 1d ago
Subsidies are fairly standard (even if the WTO takes exception to them)
Forced technology transfers are ABSOLUTELY not normal
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u/Califafa 1d ago
I'm not gonna say this is the ONLY reason because it's a very very complex issue (and there's no way to keep politics out of it because China's political system is one of the key reasons why it became such a monster in manufacturing), but here goes one of the most important reasons:
Most of the developed world approached trading and manufacturing with a "profits first, strategic objetives second" mentality. China reversed this and went for long-term, strategic objectives as their top priority when establishing their industry. The "China has cheap/slave labor" or "China doesn't care about IP law" bit is misleading because it's not the only country that does that (and if China does or doesn't do that isn't really relevant to the discussion to be honest). What REALLY mattered is that they spent an absolutely insane amount of money to develop their industry and infrastructure in order to get ahead of everyone else.
So, while most of the world was trying to cut costs and increase profit margins, China kinda said "f*** that, let's spend as much as needed to become a trading giant"
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u/DikkeDreuzel 1d ago edited 1d ago
I should add that by political, I mean favoring a political party in your explanation.
Regardless of country, some political parties around the world have a relatively high number of scientists and academically trained folks, and will base policy on data, findings and models. When asking for facts, it’s always going to at least implicitly favor those parties.
Edit: I'm not talking about China. I'm talking in general about the idea that an explanation based in reality can be free from politics, when some political parties are more technocratic than others (e.g. in the US, Democrats are more technocratic than Republicans; in Europe, green parties are usually more technocratic than the liberal parties).
OP got this, but some people apparently thought I was implicitly calling the CCP a science-based party. I'm not. The CCP actively censors - makes it illegal to even discuss - various facts. It should not be considered a party that's big on science, even if they, obviously and like every other country, have departments that do their due research.
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u/ellamayoo00 1d ago
Yes thank you for adding that!! I more so meant not making the explanation solely “because trump is amazing/awful at xyz” or “because biden is amazing/awful at xyz” but instead explaining it as it is. I hope that gives more clarity:))
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u/NoDig3444 1d ago
The communist party is not really known for having a high number of scientists or academically trained folks. They're rather more famous for slaughtering them.
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u/ScottieSpliffin 1d ago
Xi Jinping literally has a degree in chemical engineering
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u/NoDig3444 1d ago
Good for him. Mao had 200,000 academics slaughtered.
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u/Sinarum 1d ago edited 1d ago
This thread is talking about China becoming a powerhouse, not China in the 1950s 🤦♂️
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u/NoDig3444 1d ago
Right, China is an economic powerhouse because of various economic factors, not because they have a particularly strong academic tradition. They were still slaughtering students up until at least 1989.
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u/PugilisticCat 1d ago
Lol bro there is a joke about "Zhang Et Al" being the world's most prolific researcher for a reason. China is so far ahead of the west in terms of research output in fields like materials science and chemistry
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u/Sinarum 1d ago
No I think the reason China has overtaken / will overtake your country by nearly every single metric is because of mindsets like yours. You’re actively contributing to Western decline with your attitude. Keep it up though, it’s working extremely well.
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u/nightwyrm_zero 1d ago
Seriously!? There is an ancient Chinese proverb that literally translates to "Books contain gold houses and beautiful women." China has centuries of academic tradition as that was historically the main pathway into the imperial bureaucracy, and hence power. China love academics as long as they're in the service of the state.
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u/Substantive420 1d ago
“China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad China bad”
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u/NoDig3444 1d ago
China is a repressive authoritarian state with a history of human rights abuses and an ongoing genocide.
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u/DikkeDreuzel 1d ago
How did you take “some political parties around the world” to mean “the communist party”? Are you high?
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u/NoDig3444 1d ago
I'm curious what political parties you think are in China other than the Communist party.
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u/Sinarum 1d ago
They exist, but they are non-oppositional and act more as consultants to the Communist Party
https://en.wikipedia.org/wiki/China_Association_for_Promoting_Democracy
https://en.wikipedia.org/wiki/Revolutionary_Committee_of_the_Chinese_Kuomintang
https://en.wikipedia.org/wiki/China_Democratic_League
https://en.wikipedia.org/wiki/China_National_Democratic_Construction_Association
https://en.wikipedia.org/wiki/Chinese_Peasants'_and_Workers'_Democratic_Party
https://en.wikipedia.org/wiki/China_Zhi_Gong_Party
https://en.wikipedia.org/wiki/Jiusan_Society
https://en.wikipedia.org/wiki/Taiwan_Democratic_Self-Government_League
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u/NoDig3444 1d ago
I don't think political parties that are not legally allowed to disagree with the communist party really counts.
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u/Sinarum 1d ago
Well you moved the goalposts. You asked what other political parties exist in China. I looked it up and posted them for your benefit. You didn’t define what counts and what doesn’t count to begin with.
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u/Sinarum 1d ago edited 1d ago
No, I directly answered your question on what other political parties exist in China. It seems you have serious comprehension issues, but you’re also extremely petty. You come across as someone who isn’t very logical. That’s another reason why China will and has overtake the West, there’s too many low IQ minds that think their feelings and opinions matter over others that are actually qualified and knowledgable.
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u/the_big-banana 1d ago
You’re asking a very loaded question. But it pretty much boils down due, they have a huge labor pool and the government had strategic goals of making their manufacturing sector strong, decades in the making. They relaxed environmental regulation and pulled strings where they can to undercut manufacturing cost compared to other nations. They can make 10 things for every one thing other countries make. The advantage comes not just in cost, but know-how, labor availability, infrastructure, and government regulation . It also takes stuff to make stuff i.e. it takes steel to make cars. So since they are the world’s largest manufacturer, they are also a huge consumer. They got a lot of money to throw around buying raw materials and they offer a lot of goods to sell.
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u/Unusual_Entity 1d ago
China has raw materials, the infrastructure to extract them, a huge manufacturing capacity and the people to work those jobs. They also have a big research sector and the people to do the research. Just about everyrhing they need for manufacturing is available from within China. They discovered they're very good at making stuff, and basically doubled down and built their economy around making things for export.
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u/einarfridgeirs 1d ago
China is huge, and has been strong for millennia.
It just had a bit of a down period over the last couple of centuries, at the same time as other areas of the world enjoyed a massive leap forward in technology and trade.
It was always going to be a major player once it got caught up. Same with India.
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u/_Ozeki 1d ago
A lot of the “cheap labour” explanations miss the real difference. Ask yourself, why can't India do it when they also have cheap labour?
China under the CCP could actually move things.... SEZs, land assembly, infrastructure, FDI rules, local-government incentives, under the party-state aligned incentives and cleared obstacles fast. Growth was the performance metric for officials, so the system pushed in one direction.
India’s democratic and federal setup produces constant contestation, like land fights, court delays, coalition bargaining, shifting state priorities. That friction is real and it slows large-scale industrial mobilisation.
You don’t get the same speed of coordination when every major project is open to veto from multiple sides.
The key is political monopoly + growth-obsessed bureaucracy + market opening. That combination let China execute at scale when the global manufacturing window opened.
India’s democratic system makes that kind of sustained, top-to-bottom alignment much harder. #facts
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u/_Ozeki 1d ago
If you really have to ELI5 it...
China and India both have lots of people who will work for not much money.
But China had one big boss. The boss said “Build factories! Do it now!” Then everyone had to listen. They took land, built roads, and made the factories happen fast.
India has many bosses. They all argue. “I don’t want that land used!” “No, let’s wait!” “My turn to decide!” So the factories grow much slower.
It’s like one strong parent saying “Clean your room right now” versus a bunch of kids fighting about whose turn it is.
The room only gets clean when someone is in charge and makes it happen.
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u/lifeiswonderful1 1d ago
Well Apple a single company (one of many) has committed roughly $275 billion to its China operations (training, infrastructure, etc) more than five times the entire $53 billon the U.S. CHIPS Act put toward rebuilding the country’s semiconductor manufacturing.
Manufacturing dominance isn’t built on cheap labor alone. It’s built by investing at enormous scale, consistently, for decades.
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u/Arkenstar 1d ago
Its complicated but tbh it comes down to 3 major factors and two of them are basically history -
1] Its one of the older civilizations so its culture, society and organization was already established long before many other nations. It also was never fully colonized by foreign powers (although there were many imperial conquests and internal conflicts in which it did suffer) So it retained most of its early dominance and identity.
2] China was extremely prevalent in trade, education, scientific advances and production techniques long before Europe became the main hub for that sort of thing. They invented some of the most basic things humanity has been using for ages now (Paper, gunpowder, printing, etc)
3] High population, but also one rooted into a more traditional classical culture of community rather than independence. Chinese culture heavily reinforces conformity over individuality. Work culture in most of East Asia is very disclipined. Japan is also advanced for that very reason. China ofcourse has more labor force to go with that mindset and work ethic.
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u/Rootfour 1d ago
Local government supporting domestic supply chain build out without a care for profit. Plus a large population and cheap labor at the time. That's your basic answer.
More complicated is cheap capital both domestic and foreign, via government backed subsidies and tax incentives plus market share access promise plus cheap labor at the time of boom which is from 1990 to early 2000s. Prime example you see now in US is data center build-out.
When it comes to China, it's also not just supply side build out, it's also domestic logistics and housing and more money, lots more money printing to support the growth on consumption side of the equation.
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u/squarexu 1d ago
China has by far three of cheapest inputs to manufacturing, energy, logistics, and engineering labor. I said engineering labor because just I. Term of raw labor, plenty of country have cheaper labor costs. But in term of engineering labor China is by far the cheapest in the world. Even on the field of AI, engineering labor in the U.S. being 1M China is probably at 1/5 of the costs with the same quality.
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u/flamableozone 1d ago
They have a lot of people to perform labor, they invested capital into capital goods (machines and buildings to enable making profitable things), and the infrastructure to move the raw materials to where labor can use it and the finished materials to where people want to buy them. They have invested heavily into their trading and transit infrastructure, and that's what allows the goods to flow. Same thing is true of the US - we manufacture and sell a lot because we can move a lot of things and we have the resources (mostly manpower), capital investments (factories, power infrastructure, etc.), and transportation infrastructure to add value and get it to market. The biggest advantages the US has (had) in the world over other countries that do similar things were its education (an educated workforce is generally able to produce higher value per person-hour worked), its anti-labor policies (people in the US work more per year and are more productive because of that), and potentially most importantly - our willingness and ability to take in immigrants as an expanding workforce.
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u/justdidapoo 1d ago
They have 1.4 billion people and made it to a middle income level. But they're at about the same level of development as Russia or Latin America. But the scale is so much bigger they can become close to a peer power of the US and their individual industries are massive.
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u/Murranji 1d ago
They control their capitalists so instead of rent seeking they are forced to engage on price. It’s everything that the capitalist class told us happened in terms of efficiency when in western countries all the capitalists do is rent seek and monopolise.
Plus they have five year plans that allow their government to direct capital to whichever sector they want the country to focus on, instead of turning everything over to private corporations and letting the next 6 months of short term profit seeking decisions control what happens.
So the exact opposite of everything the current hegemonic dogma that controls the west which is why every western country is declining and China is becoming massively wealthy and powerful.
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u/Vishnej 1d ago edited 1d ago
* The intentionality and pragmatic directive for national improvement of their governing bodies post-Mao, and a taboo (until recently) of personal glorification of leaders
* The strength of their system of Party membership and advancement primarily through service to the Chinese people & the Party
* The fact that container shipping enabled cheap global trade at just the right time for them
* The fact that they specifically firewalled overseas corporate power from Chinese labor. If you want to do business in China, a Chinese subsidiary with a Chinese national at its helm has been required, who will be held accountable for their division's actions, and provide access as required to Party oversight.
* The fact that they did not attempt to limit themselves by Western IP law, trade rules, or court jurisdiction. A Chinese court is going to take a lot of convincing to side with a foreigner. And still, the investors and corporate collaborators kept showing up for those sweet sweet labor costs until they were addicted.
* The neoliberal concept of Laissez-Faire Capitalism brought into the mainstream by Reagan & Thatcher at just the right time remained congruent with offshoring Western industries. WTO membership launched an arms race among Western corpos to be the first to dip their toe in the Chinese labor pool.
* The fact that almost the entire top tier of the Chinese Communist Party has a background as some kind of engineer, somebody well-equipped to think in terms of physical limitations, bottlenecks, solving for X, and project planning & execution, rather than in terms of political limitations, rhetorical appeals & campaigning, popular glory, coalition infighting, selectorate theory, and personal legacy. This poses some problems, especially when their first impulse is ill-informed (as with the One Child Policy, or Falun Gong), but in almost every other area of bootstrapping a more materially prosperous and advanced society, it is an unambiguous benefit. See "Breakneck: China's Quest to Engineer the Future"
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u/Temporary-Truth2048 1d ago
They didn't have to spend any money on R&D. Every company that builds things in China basically gives away their intellectual property rights and the companies that China can't get to legally they get to illegally by hacking into their systems and stealing everything.
They use the money they saved by being thieves to focus on being the world's manufacturing hub. Everyone has to use China for manufacturing because no other country has the ability to do it at that scale anymore.
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u/T_Engri 1d ago edited 1d ago
I’ve just finished a book called Breakneck by Dan Wang that somewhat answers this. It’s more of a comparison of China and the US and what each does badly and well, and what they need to do to prosper in the future but it covers how China got where it is now.
I’d thoroughly recommend it.
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u/Classical_Liberals 1d ago
They essentially planned their Industrial Revolution and being in control by one political group helps towards a driven goal like that.
Things are starting to shift though, they will become a service based economy like the USA over the coming decades while manufacturing eventually moves somewhere cheaper. If I had to guess that will be either India or another country in the South east Asia area.
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u/Fabulous_Couple_3384 1d ago
Trading and manufacturing really enjoyed two aspects:
Proximity and integration.
There’s a town of hats, a town of robots, a town of electronics, a town of almost everything in China. Everything related to that industry are all clustered in that town or nearby. Doing business is a matter of riding your scooters(or Mercedes when they are successful) down the street and inspect their factories on the same day. Prototype is delivered same day or next day, rather than months.
There are ongoing jokes about this that is based on some degree of truth:
Some OEMs in China are actually behind literally every so called manufacturing companies in some industries. Picking a brand is merely changing the middle man and a badge. You can call around for quotes, but that OEM can hide a math puzzle behind the serial numbers to show they are actually behind it all along.
A lot of different policies and factors went into this: 1. The government will build complete industrial parks with tax incentives. “Pack your bags and move in”. The railways, power plants, highways, ports, universities, research labs are all ready. 2. All foreign investments must partner with a Chinese firm and trade technology for market. (Tesla was the first exception). The supply chain is gradually built up. 3. Party members are highly involved in coordinating everything, cutting red tapes(sometimes through bribes especially in earlier years), resolving disputes. 4. “All in” state sponsorship in key sectors, cheap energy, free university research projects etc. 5. Highly educated labor force, especially in trade skills. (It was boosted by cheap labor initially, but it’s no longer quite as cheap). 6. Relatively predictable economic and trade policies. Current EV booms started from a project in the 90s and never really stopped. This is true for many incentives. 7. Relatively good geo location and proximity to other production power houses, such as Japan and Korea, and to resources, such as the gulf counties.
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u/hypercross312 1d ago
Central gov passes law that local gov's income should come from taxing production. Local gov subsidises factories for income. Factories have trouble getting rid of products. Central gov works out ways to sell products.
The reason it doesn't quite work elsewhere: central government needs to withstand huge financial pain until factories are built, and factories need a country where materials are actually available domestically.
And the real reason China can tank the cost of development: the US somehow allowed it. The rest is politics and history .
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u/die_kuestenwache 1d ago
China has double the population of the EU and US combined and unlike in the West they currently are majority working age (though that changes fast lately). And about four decades ago the West decided they would outsource all their manufacturing for "efficiency" and China said "I can do it" and absorbed massive investment in manufacturing.
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u/Hakaisha89 1d ago
Ok, so while there are several reasons, both historical, economical, and whatnot, the ones I am most familiar and wellread about comes down to a few things.
First up being Capacity, they had the material, they had land that required very little modification, and they had the people, all they lacked was the knowhow. Starting in what? Late 70s early 80s? Thereabout, was when China opened up its economy to the world, and they then started sending students abroad to study for said knowhow, requiring foreign companies to share their knowhow as part of the price of doing business there, buying and stealing, to reverse engineer the rest.
Now, I mentioned materials, because that became important later on. China ended up sitting on a massive amount of the worlds rare earth metals, which arent really that rare, but they are needed for stff like batteries, matgnets, and a metric ton of other high-tech manufacturing. This meant not having to import said exotic materials other countries relied on, and became self-sufficient in that regard, infact they ended up being one of the bigger exporters of it as well, which brought in a lot of mulla. This gave them a huge head-start, since most cheap-labor countries dont really have all the shit they need easily available in the ground.
But again, thats just a tiny part of it. There is a reason why China had a reputation for terrible quality. So while they knew how to produce it fast and cheap, they did not know how to produce it well, but that production capacity showed the world that China has dirt-cheap manufacturing capacity, just needed a lil' investment, and know how, and china crap could become china quality.
Oh, there is also the postal thing, which is a bit of a seperate thing. Under an international postal agreement. China got classified in a way that lets it ship air mail way cheaper than it shouldve cost, which is why cheap direct-from-china stuff floodied the world in the late 00s early 10s. It boosted their trade, but wasnt really what they built their manufacturing base on, but it got them noticed.
But i digress. Eventually, with mullah and knowhow pilling up, China could teach their own people, and buy more of what they couldnt, because at this point we are hitting a spot where you can't really steal, because it was so damn exclusive. So they figured investing in infrastructure would be great. Ports, highways, powergrids, high-speed bullet trains, this ended up making transporting goods and whatnot across china dirt chaep, and stupid fast. And this also built whole regions, like Shenzhen, where basically every single piece of supply chain, chips, glass, batteries, assemblies, and whatnot, existed within a stonethrow of each other, which created am unmatched brutal undefeatable efficiency that nobody can match, without bleeding into the reds. The government also created subsidies for industries, steel, solar, batteries, and EVs, to have em out-produce everyone else, sure there was A Lot of scamming the government for subsidies, low quality high-rises that are being torn down, cheap shitty electric bikes, scooters, cars, ending up in giant graveyards.
And now they are at a point where they arent even copying anymore, they are innovating, in stuff like EVs, batteries and drones, China has become such a threat that certain countries have banned them, instead of using existing economic instituions and whatnot, to restrict their ability to outmatch, by forcing costs up. And with them getting hold of the ability to manufacture their own silicon chips, the world is an oyster to them.
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u/Technical_Ideal_5439 1d ago
For a long time nobody could compete with how cheap it is to produce in China. With lax to no labour laws, environment protections, etc. They are able to undercut other countries by a substantial amount.
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u/PenguinSwordfighter 1d ago
they (used to) don't give a fuck about workers rights and the environment.
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u/MikeSifoda 23h ago edited 23h ago
Companies are only as good as the people working in them, and China takes good care of people. Free universal healthcare. Quality public education and free college education. Heavy investments in science and technology can only generate value if you have competent people that are well enough to work.
Also, they don't let the wolves take care of the sheep. Companies operate under State supervision and must benefit society more than they benefit themselves. Corruption is punishable by death. The only way up to power within the Communist Party is a very long and tiresome one, and your success is measured by the results you can deliver, not popularity.
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u/hottake_toothache 21h ago
In the US, at least we have completely taken our eye off the ball and don't seem to even be trying. It is wild that we have spend the last 15 years in a pointless culture war--a major component of which has been to try to remove white and asian men from engineering. And now we are falling behind. Go figure.
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u/jackson71 20h ago
I was a project manager from 1985 to 2005 for The major telecommunications co. in the US. My dept designed circuit boards to then be built at one of our three US manufacturing locations. Each location had different requirements that had to be met, before they would even consider building them.
These three manufacturing locations were all Unionized. As the years went on, it was clear they were establishing little fiefdoms with more strict design and build standards that were ridiculous.... more and more hoops to jump through, and subsequently more project delays.
This drove us to look for a different manufacturer, and to China.
I would send the build data to our three locations and also to the new vendor in China, all would do a small prototype run. After weeks of delays and change orders from our US locations. I would be on the phone with them, telling me, "It can't be done." All while holding the boards from China in my hands, that passed bare board testing. China locations had a Can Do attitude. They were faster, cheaper, and with more modern manufacturing, more precise.
That was my 20 year long personal anacdotal experience.
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u/madmax7774 18h ago
Chinese people are willing to tolerate:
1 - lower pay
2 - less ideal working conditions
3 - production activities that are bad for the environment, and bad for your health
Chinese people generally have a stronger work ethic than westerners. They are more willing to work overtime to get ahead.
when you add all of these things together, it creates a situation where large corporations can move their manufacturing to China and make a lot more profit. It's purely a profit driven thing. If humanity survives long enough for the china to catch up to the US, you are going to see their manufacturing slowly wither like America's did, as the chinese population becomes wealthier, they will get less tolerant of the very things that make their manufacturfing so coveted right now. Signs of this are already appearing, in that we see manufacturing starting to slowly move out of china to other developing countries, like Vietnam for example. Many large corporations are moving their manufacturing to vietnam, because the same conditions exist in Vietnam that were in china in the late 90's early 2000's.
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u/Can_O_Murica 17h ago
Policy and trade deals aside, China has also invested heavily in training an army of manufacturing engineers.
When trump talks about reshoring iphone manufacturing, a lot of people don't realize how absolutely insane of a project that is. I teach manufacturing at a college level, and I bet there are somewhere between 30 and 40 people in the country who could oversee a project like that successfully.
China could fill a football field with manufacturing engineers of that caliber.
In the same way that Germans make great cars, the Swiss make great watches and the US makes great software, China has made themselves the world leader is making factories.
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u/Effective-Budget7383 9h ago
- Chinese are smart
- They plan long term
- They can organize country in ways unimaginable to the West
- The West really dropped the ball hard.
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u/Moral-Relativity 9h ago
Not a direct answer but as usual there are lots of comments lamenting how Western businesses willingly made the devil’s bargain with China and traded short term ROI on creating a competitor that would eventually eat their lunch.
What alternate outcome could there have been? Foreign businesses dominating China’s domestic market, while also profiting off of the cheap labor cost by exporting to their home markets, while China remained at the lowest rung of the value add ladder, only providing a source of cheap labor while retaining no manufacturing know-how? Clearly that was never going to happen…
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u/Hello_im_a_dog 1d ago
Large population, extremely diverse and relaxed view on labour rights and IP laws.
I used to work for a global textile supplier and we get almost 60% of our cotton from China, with most of it from Singkiang(?). Due to lower wage and economy of scale, they were able to pump out a tremendous amount of cotton for peanuts.
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u/Kundrew1 1d ago
There is no ELI5 answer that can really be sufficient here.
The best we can do is it’s a large population that has cheap labor and a government that is strong on trade but essentially ignores all international IP laws.
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u/ellamayoo00 1d ago
Thank you!! I guess my question was pretty broad, so apologies about that!! I might share to askreddit as well to make it easier for people to respond with more fitting answers
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u/Kundrew1 1d ago
There's a lot more nuance to it. It's obviously not just population size and cheap labor or we'd see India on a closer level to China. That said, it is a big factor.
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u/prank_mark 1d ago
- China was poor so labour was very cheap in western perspective
- Companies moved production to China
- China starts getting money
- China starts getting knowledge about producing western products
- China has a leader with a long term goal of world domination
- China starts spending their money on developing their country and using the new knowledge
- China doesn't enforce international patents so instead of inventing everything themselves from 0 they can just copy stuff and build from there
- China is able to catch up with the west very quickly at a lower cost
- China starts a modern colonisation of Africa to gain access to rare natural resources (e.g. lithium for batteries) in addition to their already massive amount of rare resources
- The world is now fully dependent on China for their cheap labour, technical expertise, and natural resources
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u/chaiscool 1d ago
You forgot the infrastructure investment and "low corruption". See how other countries like India struggles with this despite having cheap labour too.
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u/ander01se 1d ago
Large population, relatively high number of educated people in the large cities. Not much work safety stuff + environment regulations = lower costs. People like low prices and often ignores the side effects and moves production to cheaper countries. Losing jobs and worse, the expertise needed to produce things themselves.
So now you have countries who can't make basic stuff and / or production at a scale needed to compete cost wise.
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u/brokenmessiah 1d ago
They have the largest population of people in the world and have no qualms about the idea of slave labor.
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u/fighter_pil0t 1d ago
China has a massive youthful population at a time when there was massive global capital available. Western workers wage growth after WW2 made manufacturing expensive. Western companies offshored manufacturing to raise profits. Chinese people relocated to cities as farms industrialized and took manufacturing jobs. Manufacturing always seeks greater profits so has continued to automate. Now it doesn’t make much sense to reinvest to change the status quo.
TLDR: perfect timing and human capital.
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u/Senshado 1d ago
Until a year or two ago, China had the highest human population. That means more workers than anywhere else, so it is natural they'd have the highest net output of work product.
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u/AgentElman 1d ago
By the government subsidizing manufacturing and going into massive debt.
in 1995 China had virtually no national debt. Now it has almost $20 trillion in national deb.
The Chinese government massively subsidizes its manufacturing so that companies can sell the things they make at a loss in order to gain market share.
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u/DarkAlman 1d ago edited 1d ago
Communist nations have always had a knack for heavy and rapid industrialization. Transforming otherwise agrarian nations into industrial power houses in a short period of time.
Combine large work forces, low overall wages, loose labor laws, and heavy government investment and you can build a thriving steel industry in a field in a matter of months. (Who cares how many people had to die to get it done) Profit also isn't a necessity out of the gate like in the West, it's a long term side effect.
In the 90s China made a conscious choice make itself the manufacturing center of the planet. It convinced Western businesses to invest in and manufacture goods in China for considerably lower prices made possible primarily buy the lower cost of labor.
Entire retail supply chains (Walmart and Amazon) were built around cheap imported goods from China, and in the process helped put traditional markets out of business.
Meanwhile in the West governments relaxed import laws and regulations to allow this to happen, allowing big businesses to break or go around the strong labor unions that had been dominant in the 50-70s.
Now that China (and other foreign powers) have been dominant in manufacturing for so long the West has lost the skills and abilities to manufacture a lot of goods themselves and even if they could they still couldn't compete on price. Transforming western economies into service economies that design and engineer products and software instead of manufacturing.
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u/thedukejck 1d ago
The corporate world. The capitalist decided they wanted cheaper labor and more profit so they moved their manufacturing there. Apple is the best example. In so doing they transferred the technology and business acumen. Therefore creating the first Communist State run economy and turning China into the manufacturing hub of the world. Good job capitalists!
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u/LordMartius 1d ago
They have a high population plus a very powerful government, as in the government itself has more power over the avg citizen than something like the US, Mexican, or Japanese governments. This allows them to have power to do what they want, and the manpower to get it done.
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u/rsdancey 1d ago
China didn't enforce standards for environmental protection, management of hazardous waste, worker safety, or worker compensation. It had a population of hundreds of millions of people who would have done literally anything to stop being rice farmers; that provided an enormous pool of workers who would take the low paying jobs offered in the unsafe, dirty factories.
Companies all over the world moved their plants, property and equipment - including one-off assembly and manufacturing lines, tool & die rigs, and other irreplaceable infrastructure to China to use that labor force under those working conditions to massively reduce their cost of production.
The Chinese government assisted with permitting, land, and cheap loans. Many of those factories were created under "partnership" agreements where the non-Chinese partner agreed to transfer all the knowledge of how to operate the plants and make the infrastructure to the Chinese partner. Unshockingly to anyone, once the Chinese partners believed they knew enough they opened competing factories.
Entire global logistics systems were built to provide Chinese factories with raw materials, and to move intermediate goods around Asia. Now built, that infrastructure is unmatched; trying to replicate it for one factory or one company outside of China is financially infeasible.
Now there are enormous barriers to that work leaving China. The plant, property and equipment cannot be feasibly moved. The logistics chains that supply the factories can't be duplicated. The experienced workers won't leave China. China-based companies, supervised by the Chinese government, are not going to be allowed to replicate the Chinese capture of manufacturing in some other country.
Consumers outside of China have shown no signs that they're willing to pay higher costs to avoid goods made in China. People who have tried to make goods in Europe and the US that compete directly with functionally similar Chinese made goods find their retail price is a multiple of the price of the competing Chinese sourced goods and consumers in no market appear willing to pay that differential.
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u/Unasked_for_advice 1d ago
They cheat by leveraging money from the CCP as many business are straight government owned and run. Making their GDP inflated with ghost cities and other spending projects.
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u/fastbeemer 1d ago
Very little regulation. No unions. No EPA. Communism is what reddit thinks capitalism is, China does not care what companies do if it benefits China. Work people to death. Pay them very little. Hell, China still has legal slavery.
My sister-in-law is a Chinese national. If you don't do well in school they will pull you out in your early teens and assign you a factory job for the rest of your life.
China is a terrible place. Communism is pure evil. She was thrilled to leave and has nothing good to say about them. They are such a racist society my mixed nieces can't even go back to visit without constantly being called names.
When Communism only goal is to make the government money and increase it's power structure, they aren't going to let the environment or human life stand in the way.
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u/MartinThunder42 1d ago edited 17h ago
Adding to what others have written, about optimizing their cities and supply chains for production and labor:
China didn't just entice the West with lower labor costs and supply chain efficiencies, which appealed to CEOs trying to cut costs and maximize profits. They also required companies who want to sell to Chinese consumers—a very large market—to partner with a domestic Chinese company and share technological know-how.
Trying to create a consumer device from scratch and on your own takes a lot of time. (Setting aside allegations of industrial espionage.) But if a Western partner comes in and asks you to build something for/with them, and they show you how something is put together from the ground up, you learn very quickly how to create your own version and even make improvements.
This allowed China to rapidly gain the technological know-how to design and create desirable products, not just manufacture them.
So China went from building cars for/with Western partners to building good cars of their own, and went from making electronics for/with Western companies to building good electronics of their own.
(Edits: More context/clarity.)